Nifty ends near 6-month closing low, Sensex in red; ITC drags

18 November 2016

3:30 pm Market closing: The market has ended lower with the Nifty near 6-month low. The Nifty is down 5.85 points at 8074.10 and the Sensex is down 77.38 points at 26150.24. About 1312 shares have advanced, 1277 shares declined, and 166 shares are unchanged.

2:57 pm Market Update: Benchmark indices were trading lower. The Sensex was down 51.83 points at 26175.79 and the Nifty declined 2.55 points to 8077.40.

2:50 pm Buzzing: Punj Lloyd shares gained more than 3 percent intraday on agreement for development of solar assets in Uttarakhand.

"Punj Lloyd Infrastructure (PLIL), a wholly owned subsidiary, has executed definitive agreements with India Power Green Utility (IPGUPL) to co-develop 30 MW of solar assets in Uttarakhand, in respect of three solar power projects," the engineering company said in its filing.

Three solar power projects, each of 10 MW capacity was won by PLIL under the tariff based competitive bidding process in October 2015 that will be executed by its wholly owned subsidiaries PL Surya Vidyut, PL Sunrays Power, and PL Solar Renewable.

As per the transaction, PLIL will divest 49 percent of its shareholding in its three subsidiaries. The SPV's have signed 25 years power purchase agreements with Uttarakhand Power Corporation Limited, the company said.

2:39 pm Gold Premium: Gold premiums in India jumped to two-year highs this week as jewellers ramped up purchases on fears that the government might put curbs on imports after withdrawing higher-denomination notes from circulation in its fight against black money.

Retail demand was subdued due to a cash crunch following the government's move on high-value banknotes, but dealers in the world's No.2 consumer of the metal were charging a premium of up to USD 12 an ounce this week over official domestic prices that include a 10 percent import tax.

The premium was the highest since mid-November 2014, and compared with a premium of up to USD 6 an ounce last week.

2:29 pm Demonetisation: The government is mulling banning exchange of old Rs 500 and Rs 1000 currencies in a few days, officials told CNBC-TV18.

Officials cited misuse of currency as well as use of multiple IDs by people to exchange notes as the main reason behind considering stopping exchange, reports CNBC-TV18.

Also, the government is likely to clarify the penalty provisions for high value cash deposits. The 200 percent tax penalty suggested earlier does not exist under any of the present laws.

Officials said that the government could also amend tax laws to include a penalty provision on high cash deposits.

2:00 pm Market CheckEquity benchmarks remained directionless in afternoon trade with the Nifty hovering around 8100 level while the broader markets turned positive.

The 30-share BSE Sensex was down 76.57 points at 26151.05 and the 50-share NSE Nifty fell 9.05 points to 8070.90 whereas the BSE Midcap index was up 0.6 percent and Smallcap gained 0.2 percent on positive breadth.

About 1304 shares advanced against 1171 declining shares on the exchange.

1:55 pm Interview: In a move to curb black money, government cancelled the legal tender character of Rs 500 and Rs 1000 notes. Banks have been working aggressively ever since to help people in this crisis of currency ban.

In conversation with CNBC-TV18, Usha Ananthasubramanian, MD & CEO of Punjab National Bank (PNB), said 200 branches of PNB have been working in double shifts.

She said demonetisation has a positive fallout for banks. There is increase in current and savings account ratio (CASA) and deposits of about Rs 42,000 crore have been added to the accounts. There is also increase in new bank accounts.

She further said there will be huge inflows towards the end of December. There have been good inflows in loan accounts of about Rs 5000 crore.

1:45 pm Coal India: State-owned Coal India arm Northern Coalfields has awarded Rs 1,469.84 crore project to DBL-DECO, a joint venture of Dilip Buildcon, for excavation work at one of its open cast mines.

"Northern Coalfields Ltd (NCL) has declared the DBL-DECO (a joint venture of the company) as the successful bidder (L-1) for excavation of overburden of first dig (solid) and rehandling by mechanical means at specified places at Nigahi OCP (Open Cast Project) of NCL at a project cost of Rs 1,469.84 crore," Dilip Buildcon Ltd said in a filing to BSE.

Dilip Buildcon Limited (DBL) is a private sector road-focused engineering procurement construction(EPC) contractor in the country. It is a growing infrastructure development firm with about 78.44 percent y-o-y growth for the last four years, the company said on its website.

1:30 pm European: European stocks were higher in morning trade on Friday as rising US bond yields pushed the dollar to a more than 13-and-a-half-year high as investors upped bets on a December rate hike.

The pan-European STOXX 600 was up 0.23 percent.

Speaking on Thursday, Federal Reserve Chair Janet Yellen told Congress than an increase in interest rates could be "appropriate relatively soon", in comments seen as the strongest hint yet towards a move in December. A rise in interest rates would also signal that the US economic recovery is gaining momentum.

Analysts attributed the fall in prices to weak trends overseas as dollar strengthened after hints of rate hike in December by US Federal Reserve Chair Janet Yellen, eroding demand for the safe-haven precious metals.

The market breadth also improved as about 1276 shares advanced against 1074 declining shares on the BSE.

12:40 pm Market Outlook: Deven Choksey of KR Choksey says market is likely to face a larger amount of heat because of fall in the rupee value. It has already gone beyond 68/USD.

"Should it fall beyond that level and go up to 69/USD or a little above, which it touched in August, 2013 then in such situations we might see some more pressures in the market largely coming out from the global exchange traded funds (ETFs) who are relentless in selling into Indian markets," he says.

12:20 pm Buzzing: Country's largest telecom operator Bharti Airtel shares rebounded 2 percent intraday after a 4 percent loss in previous session. CLSA has retained its buy rating on the stock with a target price of Rs 410, given its strong execution, potential improvement in balance sheet and with valuations at around 20 percent discount to 3 years EV/EBITDA.

The company's management indicated that the immediate revenue impact of demonetisation is likely to be limited given low ticket size for mobile recharges.

According to the brokerage house, there may likely be an impact, especially on data revenues due to discretionary spend. However, given the forecast of 2 percent YoY revenue growth and 3 percent YoY EBITDA growth in 2HFY17, it sees limited risks to estimates.

12:00 pm Market CheckEquity benchmarks continued to be listless in noon trade with the Nifty gyrating in a 40 points range. Auto, infra, healthcare and oil stocks gained strength but the selling was seen in technology, FMCG, Tata Group and private banks stocks.

The 30-share BSE Sensex was up 20.48 points at 26248.10 and the 50-share NSE Nifty gained 11.25 points at 8091.20.

Oil prices fell as the strengthening US dollar snuffed out rekindled hopes that OPEC might agree production cuts. International Brent crude oil futures were trading down 0.75 percent at USD 46.15 per barrel, from their last close. US West Texas Intermediate (WTI) crude oil futures were trading at USD 44.95 per barrel, down 1.03 percent, from their last settlement.

Gold dropped to its lowest in 5-1/2 months and was set for a second weekly decline, dragged down as the US dollar soared after comments from the Federal Reserve bolstered expectations US interest rates would rise next month.

11:45 am Interview: In a move to curb black money, government cancelled the legal tender character of Rs 500 and Rs 1000 notes . Banks have been working aggressively ever since to help people in this crisis of currency ban. In conversation with CNBC-TV18, Usha Ananthasubramanian, MD & CEO of Punjab National Bank ( PNB ), said 200 branches of PNB have been working in double shifts. She said demonetisation has a positive fallout for banks. There is increase in current and savings account ratio (CASA) and deposits of about Rs 42,000 crore have been added to the accounts. There is also increase in new bank accounts. She further said there will be huge inflows towards the end of December. There have been good inflows in loan accounts of about Rs 5000 crore.

11:30 am FII view: Speaking to CNBC-TV18 Kenneth Andrade, Founder & CIO of Old Bridge Capital Management said that the double whammy of Donald Trump presidency and demonetisaiton drive are event-driven outcomes. ''There won't be any surprises from Corporate India or government announcements in the next six months to one year,'' he said, adding that one has to look at it on a quarter-to-quarter basis. India is a USD 2 trillion economy and cash outflows will constitbute about 2 percent of the GDP, and it could lead to a significant shock towards the financials year, he warned. For the lost momentum to come back both in terms of GDP growth and corporate earnings, it will take another 12-18 months, he maintained.

The market continues downtrend with Sensex up 10.10 points at 26237.0. The Nifty is up 5.10 points at 8085.05. About 1067 shares have advanced, 1088 shares declined, and 98 shares are unchanged.

NTPC, Sun Pharma, ONGC, Bharti Airtel and M&M are top gainers while GAIL, HUL, Tata Motors, ITC and TCS are losers in the Sensex.

Emerging markets are yet to digest Donald Trump's victory and strengthening of US dollar on the back of an uptick in US bond yields pose as a major headwind for them, says Jonathan Schiessl of Ashburton Investments.

Speaking to CNBC-TV18 Schiessl listed his views on the outcome of the US Presidential election and the impact of demonetisation on the Indian market.

On demonetisation he said that it fits in with Prime minister Narendra Modi's medium term reform plans and it can impact growth for the next 2-3 quarters however, it does put some of the earnings estimates at risk.

10:59 am Market Update: Equity benchmarks remained volatile. The Sensex was up 15.18 points at 26242.80 and the Nifty up 7.15 points at 8087.10.

Deutsche Bank has rated the stock a buy with Petronet LNG being top pick amongst the gas utilities as it expects LNG demand in India to improve helped by lower LNG prices and increase in industrial activity.

Petronet, with 50 percent capacity expansion at Dahej from current quarter, is well placed to benefit from this demand surge, it feels.

The brokerage has raised its volume estimates resulting in 4-13 percent increase in FY17-19 EPS and 14 percent increase in target price to Rs 415.

Citi has maintained its buy rating as it remained sanguine on the long term outlook for Petronet given use-or-pay contracts that are already in place for more than or equal to 90 percent of its eventual Dahej capacity of 17.5 MMTPA, which provide high visibility to volume/EBITDA/EPS CAGR of 13/23/26 percent over FY16-20.

10:38 am Interview: Indian software service group Infosys is bracing for pressure on its US business from anti-immigrant policies by US President-elect Donald Trump, who has identified clamping down on immigration as one of his three top priorities.

"Margins might be impacted in the near-term," Chief Executive Vishal Sikka said, adding the company had not yet done any simulations on how large the impact may turn out to be.

Infosys' contingency plan for the case that the group would not be able to send low-cost developers to work with temporary work visas on big tech projects in the United States would be to hire staff locally, he said.

10:20 am Market expert: Market in the short-term can go lower than what we expected earlier as a result of the demonetisation drive along with global factors but the medium to long term view still remains positive, says Vibhav Kapoor, Director, IL&FS.

However, he cautions that although it is tempting to buy at lower levels one must buy in smaller quantities and not chase the market. Then buy more on dips, he suggests. ''Look at good quality companies,'' says Kapoor in an interview to CNBC-TV18.

He is surprised by the fact that RBI did not cut rates immediately but expects a 50-100 bps cut from the Central Bank in coming days.

The 30-share BSE Sensex was down 44.39 points at 26183.23 and the 50-share NSE Nifty fell 8 points to 8071.95. The market breadth remained negative as about 1109 shares declined against 786 advancing shares on the BSE.

Asia markets were mixed, with the Japanese market leading gains on the back of a relatively weaker yen.

The benchmark Nikkei 225 was up 0.76 percent, while the Topix index gained 0.63 percent. Investors were also awaiting details of a meeting between Japanese Prime Minister Shinzo Abe and US President-elect Donald Trump in New York.

9:55 am FII view: Sanjay Mookim of Bank of America Merrill Lynch says without a private capex cycle, Indian consumption is the only 'hope' in town. According to him, long-term investors may look to ride through this dip in consumer activity.

He says a more active strategy would be to cut consumer discretionary weights now; but to stay alert to demand trends.

He further says the increase in US 10-year bonds is currently hurting high-duration assets as well; although he believes this move should decelerate soon.

"The conservative portfolio now would look to add utilities like power, gas, telecom and oil marketing companies. A more balanced outlook would be to also add to pharma, staples and quality banks. Global cyclicals depend on external factors and may have a few legs left. Sector allocation starts to matter more in bear markets, Mookim says.

9:45 am Highways: Government said it has approved 12 highway projects worth Rs 6,067.9 crore in eight states including Uttar Pradesh and West Bengal.

Most of the 476-km projects are under engineering, procurement and construction (EPC) mode for augmenting highways.

"National Highway projects worth Rs 6067.9 crore and totalling 476.386 km were cleared by the Standing Finance Committee on November 15," Ministry of Road Transport and Highways said in a statement.

The projects are in Manipur, Nagaland, Arunachal Pradesh, Maharashtra, Goa, West Bengal, Uttarakhand and Uttar Pradesh.

9:30 am Rupee outlook: In conversation with CNBC-TV18, Mitul Kotecha of Barclays, said the decline in Indian currency is in line with other Asian currencies. He said there is a broad generalised selloff among emerging market (EM) assets. This is provoked by a big move in the US. He further said there are worries that US rates are going to be moving higher and will result in some outflows from Asian markets. This is clearly affecting a majority of the region. He also said the rupee may be less exposed.

The market has opened flat with the Nifty below 8100. Teh 50-share index is up 17.60 points or 0.2 percent at 8097.55 while the Sensex is up 8.05 points or 0.03% at 26235.67.

BHEL, Wipro, Bharti, Adani and Axis Bank are top gainers while Tata Motors, ITC, Tata Steel, Cipla and L&T are losers in the Sensex.

The Indian rupee declined in the early trade on Friday. It has opened lower by 18 paise at 68 per dollar versus 67.82 Thursday.

The rupee hit 68 mark per dollar for the first time since June 27, 2016. Bhaskar Panda of HDFC Bank said, "The dollar index had touched 13.5-year high before retreating. The USD-INR pair is expected to trade in a range of 67.80- 68/dollar."

Meanwhile, Federal Reserve Chair Janet Yellen's signals that a rate hike is coming 'soon' fuelled a global rally. US markets end within striking distance of record highs, led by surge in banking stocks.

Yellen has warned that it would be a mistake to leave interest rates unchanged for too long. Yellen argued that if the Fed waits too long, it might find itself having to hike rates more aggressively to calm an over-heating economy.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.3 percent in early trade to hover just above its four-month low touched earlier in the week. It looks set to log its fourth straight week of losses. The dollar's rise, however, was a boon for Japan's exporter-driven Nikkei average, which rose 0.9 percent to a 10-month high.

On Wall Street, the benchmark S&P 500 index rose 0.5 percent to within a hair of its record high as bank stocks were boosted by bets on higher interest rates and consumer discretionary stocks were helped by favourable economic data and earnings.

The 10-year US Treasuries yield rose to 2.326 percent, its highest since January. The two-year US Treasuries yield rose to a 10 1/2-month high of 1.058 percent.